Yes, the big six lenders are competing on rate, but in very narrow bounds: squeaky clean credit with credit score pass rates going down as LTVs go up.
Things are better than they were, but heavens, they could hardly have got worse.
How will things improve? Currently, we simply do not have enough mortgage lenders. We know how difficult start-ups are; if only from the few who‘ve made it through to launch.
However, I believe there are grounds for optimism on this front. Lord Turner recently announced a halving of the capital requirement for new banks, with the regulator acknowledging that the orderly failure of a small bank need not presage market chaos. As they do not represent the same market risk as the megabanks they can be treated differently.
Also, it seems that the break-up of the FSA into PRA/FCA will coincide with a new approach to the authorisation not just of banks, but also non-bank lenders. We await an FSA paper in the next few weeks dealing with this and have been told it will specifically deal with barriers to entry; surely a big step forward.
Let’s also acknowledge the competitive role of our oldest mortgage lenders; the building societies. Having gone through a difficult period, those building societies who survived the credit crunch are in very good shape.
The larger ones give the banks a run for their money and many of the regional ones are injecting creative products and personal service into the broker market. Whereas brokers might once have been a necessary evil to them, many are now enthusiastically embracing the professional skills of specialist product development and intermediary distribution.
I believe we will see this spread across the sector as building societies return to their arguably long lost role of helping people of all shapes and sizes with their varying and complex mortgage needs.
Colin Snowdon is executive partner at Saffron Building Society